Minnesota’s big and growing government is bad for everyone

Quite a variety of words have been used to describe what happened in the 2023 legislative session. But whether you think the session was “bonkers” or “transformational,” there is no denying that it was nothing short of extraordinary. The Minnesota state government has grown to an unprecedented size, the effects of which should start to be felt substantially this year and going forward.

Is this going to be a good thing? A lot of signs point to a resounding NO.

A recap on new rules

To recap what happened last session, here are some of the changes that were passed.

A slew of new laws have just taken effect as of January 1, regulating everything from political contributions to heating temperatures in rental homes.

Going forward, foreign-influenced corporations are prohibited from making certain types of political contributions. Employers will have to provide sick and safe time leave to all employees and are not allowed to ask prospective employees about their pay history.

Rules have also been tightened for contractors working at oil refineries. Specifically,

Contracts entered, extended, or renewed on or after Jan. 1, 2024, between refineries
and contractors will require that a percentage of workers be graduates of, or apprentices in, a registered apprenticeship program. The requirements will be phased in over time so 30% of a contractor’s workforce must qualify as “skilled and trained” as defined by the law by Jan. 1, 2024, 45% by Jan. 1, 2025, and 60% by Jan. 1, 2026

Rental housing is perhaps where the most number of new rules are taking effect. Just to mention a few, landlords are now required to keep rental units at least 68 degrees in the winter. Landlords also can no longer require renters to declaw or devocalize their animals, and they have to give a 14-day notice before filing for eviction. And “for leases longer than 10 months, a landlord must wait four months after the tenant moves in before they can ask them if they want to renew the tenancy.”

These are not all the rules that were passed in the 2023 legislative session. A bunch of other rules, such as restrictions on payday loans, took effect in August 2023 at the end of the legislative session. Some are expected to take effect much later, such as paid family and Medical leave and fees on deliveries.

A recap on spending

The intrusion of the state government into our everyday lives, moreover, extends well beyond new rules. Taxes have gone up, and so has spending, leading to an all-around bigger state government.

Taxes were raised by over $9 billion in the last session. And looking at the budget, while Minnesota spent $52 billion in the 2022-23 biennium, that number was raised by a third to $69.5 billion (not including inflation) for the 2024-25 biennium at the end of the last session.

Thanks to some higher-than-estimated spending, spending has only grown since the end of the session. Last December, the state budget forecast showed that estimated spending for the 2024-25 biennium has grown by $1 billion since the end of the session reaching $71.5 billion (not including inflation).

What this means for you

Minnesota’s bigger government has numerous troubling implications for every Minnesotan.

The budget is already flashing red

The state budget for example is already showing signs of unraveling. Whether you call it a deficit or imbalance, Minnesota has a $2.3 billion budget hole that it needs to fill in the next biennium. This is entirely thanks to the record spending that happened in the last session. Even if that gap was filled with the surplus that the state is expecting in the current biennium, some budget issues are still later to come as spending on these new and existing programs grows.

Estimated spending on Health and Human Services, for example, has already grown by over $1 billion since the end of the last session. And, the free universal meal program that was passed is now costing more than the state estimated. We are yet to see how much the tax credits that were passed last session will end up costing the state.

All things considered, this new spending is going to be hard, if not impossible, to sustain.

New rules are bad for freedom, and bad for the economy

While proponents of these new rules have hailed them as new protections for renters, consumers, and workers, the result is going to be far from positive. As costs rise for employers and businesses, they are going to be passed on to workers and customers — including renters. In the worst cases, businesses would likely close, leading to job loss, and lower choices for consumers.

New restrictions on payday loans, for example, have already curtailed lending as some lending businesses have chosen to close shop.

Minnesota already ranks unfavorably in studies that rank economic freedom in the U.S. Two studies that were published last November, for example, both ranked Minnesota as one of the least free states in the country. While taxes contributed disproportionately to that ranking, regulations weren’t better either. Minnesota ranked below average on those too.

This just means that as these new rules continue to gradually take effect, Minnesota will only become less and less free.

A big government is bad for everyone

It does not matter what the intentions are, at the end of the day, a bigger government helps no one.

Higher taxes are bad for workers, consumers, and businesses. Higher government spending displaces productive investment from the private sector. New rules hamstring businesses, workers, entrepreneurs, and consumers, preventing them from conducting productive economic activity.

Let’s not forget that Minnesota’s economy hasn’t been doing well for quite some time already. The state’s new bigger government isn’t going to reverse that. Quite to the contrary, in 2024 and forward, that trend is likely only going to get worse.